Largest Long Beach city union agrees to deficit-shrinking pension reform

LONG BEACH - A long-sought pension reform package approved by the city's largest employee union shrinks next year's projected deficit by more than 33 percent.

The about 3,600-member International Association of Machinists and Aerospace workers concluded a vote in favor late Wednesday on the deal that city officials say will save $125.5 million in the next 10 years.

The concessions combine higher employee retirement contributions with reduced benefits for future employees to save $3.8 million in Long Beach's general fund and $11.8million across all funds each year, according to a news release from City Hall.

The general fund deficit for the 2014 fiscal year is estimated at $10.9 million.

"This has been an arduous process, but we now have reformed public pensions in Long Beach," Mayor Bob Foster said in the release.

"Today's vote means savings of $11.8 million dollars next year and creates a more sustainable system for the future. I thank each of the city employees who voted for these reforms and applaud the IAM leadership for their efforts."

The deal, which still requires council approval, caps off three years of negotiations between Long Beach and its major labor groups to scale back rising pension costs. The city's other two major unions, the police and firefighter associations, consented to reforms in 2011 that were projected to save $100million by 2022.

"I'm very proud of my membership for stepping up to the plate in these difficult economic times," said Ray Rivera, grand lodge representative of the International Association of Machinists and Aerospace Workers, Western Territory, whose statement was also included in the news release.

"With a majority of our membership residing in Long Beach, we were pleased to be able to come to an agreement that benefits our members, the city and the community with an estimated savings of more than $125 million through 2023."

IAM members voted throughout this week on the reforms. The changes include current workers paying 6 percent more of their salaries toward retirement costs, an increase from 2 percent to what is considered a full "employee pickup" of 8 percent, while continuing to receive 2.5 percent of their pay as pension for each year worked and being able to retire at age 55.

The agreement establishes lower benefits for employees hired after Jan. 1, with a 7 percent pension contribution, 2percent as pension for each year on the job, and retirement eligibility at age 62.

Also, the IAM's current contract would be extended one year, through Sept. 30, 2014. No IAM employees would be laid off for the remainder of the current fiscal year ending Sept. 30 under the reform deal.

The council could vote on the deal as early as Tuesday, city spokesman Tom Modica said.

Budget and Performance Management Bureau Director Dennis Strachota said Thursday that the savings, though significant, aren't enough to get Long Beach to stable fiscal health.

"It certainly means that the deficit is within range of starting to get close to zero," Strachota said.

Public officials should continue a disciplined budgeting outlook even after many years of sustained reductions, he said.

"We want to avoid situations where when the next down cycle comes, we're right back into a structural deficit," Strachota said.